How to Contest a Low Appraisal

Receiving a low home appraisal can be frustrating, especially if it jeopardizes your financing or the purchase price you’ve negotiated. However, it is possible to contest a low appraisal by following these steps:

1. Understand the Appraisal Report

Review the Report for Errors

• Carefully read the appraisal report to ensure all information is accurate.
• Common errors to look for:
• Incorrect square footage.
• Missing upgrades or renovations.
• Incorrect or outdated comparable sales data.

Compare to Local Market Trends

• Check if the report reflects current market conditions, including rising prices or high demand.

2. Gather Supporting Evidence

Provide Additional Comparables

• Work with your real estate agent to find recent sales of similar properties that were not included in the appraisal.
• Key Criteria for Comparables:
• Similar size, age, and style.
• Located within the same neighborhood.
• Recent sales (typically within the last 6 months).

Highlight Property Improvements

• List any renovations or upgrades (e.g., new roof, remodeled kitchen) that may have been overlooked.
• Provide receipts or contractor invoices as proof.

Point Out Overlooked Features

• Unique property features (e.g., energy-efficient appliances, large lot size) can add value.

3. Submit a Reconsideration of Value (ROV) Request

What is an ROV?

• An ROV is a formal request to the lender or appraisal management company to review and revise the appraisal.

How to File:

• Work with your lender to submit the ROV.
• Include:
• A clear explanation of why you believe the appraisal is inaccurate.
• Supporting documents (comparables, receipts, and photos).

Response Time:

• The appraiser or lender typically reviews the request within 5–10 business days.

4. Request a Second Appraisal

When to Request a New Appraisal:

• If the first appraisal has significant errors or the appraiser was unfamiliar with the local market.

What to Know:

• The cost of a second appraisal is typically borne by the buyer.
• Some lenders may not allow a second appraisal unless there’s a strong justification.

5. Negotiate with the Seller

Renegotiate the Purchase Price

• Use the low appraisal as leverage to lower the purchase price to match the appraised value.

Split the Difference

• Propose that the seller and buyer each cover a portion of the difference between the appraised value and the agreed-upon price.

Include Seller Credits

• Negotiate seller-paid closing costs to offset the impact of the low appraisal.

6. Explore Other Loan Options

Increase Your Down Payment

• Cover the gap between the appraised value and purchase price by increasing your down payment.

Look for Lenders with Different Appraisal Policies

• Some lenders may have different processes or allow for alternative valuation methods.

Tips for Contesting a Low Appraisal

• Stay Professional: Keep communication factual and avoid emotional arguments.
• Be Timely: Act quickly to ensure the issue doesn’t delay closing.
• Work with Experts: Engage your real estate agent, lender, or attorney for guidance.

Positive Outcome Possibilities

• Successfully contesting an appraisal can save you thousands and ensure you’re paying a fair price for the property.
• Even if the appraisal isn’t adjusted, you can use it as a tool to renegotiate or explore other financial options.